Greek unions grounded flights, kept ferries docked at ports and shut down public services today to protest wage cuts as the government sticks to conditions of an international bailout. Protesters clashed with police in Athens. Air-traffic controllers walked off the job, canceling all flights to and from Athens International Airport. Public transport workers, whose salaries were cut 10 percent under a bill approved early today in parliament, worked on and off between 9 a.m. and 5 p.m. to carry protesters to rallies. “In terms of our salaries, we are going back at least 20 years,” said Stamatis Klapsis, 52, who has worked as a stationmaster at a suburban bus depot in the capital Athens for 31 years. “They are taking us back to the Middle Ages.” While Prime Minister George Papandreou has reduced government spending and raised taxes, the reality of overhauling labor laws is biting hard in a country where the wage bill for state-owned employers often consumes revenue. The Athens bus operator has 2,000 vehicles and three times as many workers to operate them, with salaries amounting to almost twice revenue, according to figures from the company and Finance Ministry. About 20,000 people heeded a call from the country’s two biggest union groups to protest in Athens, according to police estimates. Some protesters threw fire-bombs at officers deployed outside parliament and at the Finance Ministry in the center of the capital. Police responded with tear gas and flash grenades. Former transport minister Kostis Hatzidakis was attacked by protesters and led to safety after receiving cuts to the face, television footage showed. Belt Tightening The International Monetary Fund, which together with the European Union approved a 110 billion-euro ($148 billion) package of emergency loans in May, said on Nov. 23 Greece was at a “crossroads.” Poul Thomsen, head of the IMF’s Greece mission, said the country needs to lower health spending, cut debt at state-owned companies and increase tax collection. “You can tighten your belt up to a point and then you reach a point where fiscal austerity is self defeating and I think they’ve reached that point,” said Diego Iscaro, an economist at IHS Global Insight in London. “Now they really have to concentrate on these kinds of measures.” Other groups taking part in today’s strike include bank employees, doctors, teachers and employees from state-controlled Public Power Corp., which supplies electricity in the country of 11 million people. Taxi drivers turned off their engines from 10 a.m. to 2 p.m. Bus, train and subway workers plan a 24-hour strike tomorrow, the third in a week since plans to decrease their wages were approved by the cabinet on Dec. 9. Debt Increase Spending by Greek public corporations, such as Hellenic Railways Organization SA, helped add 0.7 percentage points of gross domestic product to the 2009 budget deficit and increased debt by 18 billion euros, the EU said on Nov. 15. The revision of Greece’s 2009 shortfall to 15.4 percent of GDP has put pressure on Papandreou to deepen cuts to meet targets in the bailout package, which has averted a Greek default. The governing socialist Pasok party, which took power in October 2009 to find the country’s budget numbers were wrong, traditionally gains its support from unions. “We made a choice, a conscious choice to accept an agreement with a mechanism that we ourselves worked to realize,” Finance Minister George Papaconstantinou told parliament yesterday before the debate on further reductions to state-paid salaries. “When are we going to look in a mirror and see the reality and dare to make the changes needed?” Deficit Pledge Papaconstantinou pledged to get the deficit to 7.4 percent of GDP in 2011, down from 9.4 percent of GDP this year, and plans to save 800 million euros next year from state companies. Workers will keep their jobs by being deployed elsewhere. The law was approved by a majority in a vote early today. Papandreou expelled a member of his ruling Pasok party, Evangelos Papachristos, for voting against the bill in principle, according to a separate e-mailed statement from the prime minister’s office. The legislation was supported by 156 lawmakers, with 130 voting against. About 89 percent of workers at state companies, known as DEKOs in Greece, will have wages reduced 10 percent because their monthly salaries exceed 1,800 euros, according to the bill yesterday. Gross wages will be capped at 4,000 euros a month. ‘Real Cut’ “This is a real cut,” said Stefanos Manos, economy minister from 1992 to 1993 in the opposition New Democracy government. “But it will have a cost in the operation of the system. You can’t make a nurse out of a railroad worker. The government will do that, but we won’t get anything out of it.” The 1,082 employees at the Athens-Piraeus Electric Railways Company ISAP make an average 56,554 euros a year, almost three times the average wage at a private company, according to Finance Ministry figures. They operate one track from the capital’s port of Piraeus to the northern suburb of Kifissia. The 11 most unprofitable state companies had combined sales of 1.5 billion euros in 2009 and losses of 1.7 billion euros, the ministry’s data show. Wage costs for the 11 employers totaled 1.2 billion euros in 2009, with 78 percent of income going to salaries. The bill also allows employers to sidestep industry-wide wage agreements and forge wage and working-time accords with their own workers, part of measures promised to the EU and IMF in May and designed to make the country more competitive. Participation ADEDY, the largest public-sector union, and General Confederation of Labor, or GSEE, Greece’s largest private- industry union, have criticized the move as a tool that will lead to more job losses just as the economy shrinks. GSEE said in an e-mailed statement that participation in protests at refineries, shipyards, ports and some companies was 100 percent, with nine in 10 workers participating at banks and state-controlled companies like Public Power. The law is “appalling, unacceptable and places the weight of the crisis on the workers again, abolishing basic and fundamental rights,” Stathis Anestis, a GSEE official, said in a statement on Dec. 10. The economy is forecast by the government to shrink 4.2 percent this year and 3 percent in 2011. Unemployment will jump to 14.6 percent next year from 12.1 percent this year. “Right now we have a common enemy, those who are in government, the IMF and the EU,” said Klapsis, the stationmaster. The IMF “wherever they pass through is scorched earth, the same as fire. They leave nothing behind,” he said. To contact the reporter on this story: Maria Petrakis in Athens at mpetrakis@bloomberg.net. To contact the editor responsible for this story: Rodney Jefferson at r.jefferson@bloomberg.net